Pursuant to information received from the DGCEI regarding clandestine sales, the assessment was reopened under section 147. Based on a seized diary maintained by a purchaser recording cash payments, corroborated by statements of the purchaser’s Managing Director, accountant and commission agent, the AO treated the entire alleged unaccounted sales of \u20b97.51 crore as unexplained money under section 69A. The CIT(A) accepted the existence of unaccounted sales but, relying on judicial precedents, restricted the addition to 6% of the turnover, representing the embedded profit. The Tribunal upheld the reopening as valid and confirmed that the seized diary and corroborative third-party evidence established the existence of unaccounted sales. However, following the principles laid down in CIT v. President Industries\u00a0 (2002) 258 ITR 654 (Guj) HC) and Dy.CIT v.\u00a0 Panna Corporation(2012) 82 CCH 26 (Guj) HC), it held that only the profit element embedded in the unaccounted turnover could be brought to tax and not the entire sale proceeds. Since the possibility that corresponding purchases were already accounted for could not be ruled out and no material was brought on record to justify a higher profit rate, the Tribunal held that the estimation of profit at 6% by the CIT(A) was fair and reasonable. Accordingly, the assessee’s appeal was partly allowed, and the Revenue’s appeal was dismissed. (AY. 2011-12)<\/p>\n","protected":false},"excerpt":{"rendered":"
S. 69A: Unexplained money-Addition cannot be made on the entire value of alleged unaccounted sales-Only the profit element embedded in such sales is taxable, even where the existence of clandestine sales is established through seized documents and corroborative third-party statements-Estimation of profit at 6% by the CIT(A) was held to be reasonable. [S. 69A, 147]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_feature_clip_id":0,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_post_was_ever_published":false},"categories":[21],"tags":[],"class_list":["post-62892","post","type-post","status-publish","format-standard","hentry","category-income-tax-act"],"acf":[],"jetpack_featured_media_url":"","jetpack_shortlink":"https:\/\/wp.me\/p9S2Rw-gmo","jetpack-related-posts":[],"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts\/62892","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/comments?post=62892"}],"version-history":[{"count":1,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts\/62892\/revisions"}],"predecessor-version":[{"id":62893,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts\/62892\/revisions\/62893"}],"wp:attachment":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/media?parent=62892"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/categories?post=62892"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/tags?post=62892"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}